Cheque and Conversion premium: Difference between pages

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A written order from one party (the drawer) to another (the drawee, normally a bank) requiring the drawee to pay a specified sum on demand to the drawer or to a third party specified by the drawer.  
The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares.
 
 
'''Example'''
 
The current market price of ordinary shares is £2.
 
The conversion price is £2.50. 
 
 
The conversion premium is given by:
 
= (2.50 - 2.00) / 2.00
 
= 0.50 / 2.00
 
= 25%.


Cheques are widely used for settling debts and withdrawing money from banks.


== See also ==
== See also ==
* [[Bank cheque]]
* [[Conversion price]]
* [[Cash letter]]
* [[Convertible bonds]]
* [[Cheque clearing]]
* [[Cheque truncation]]
* [[Clearing float]]
* [[Country items]]
* [[Draft]]
* [[Drawee bank]]
* [[Drawer]]
* [[Mail float]]
* [[Money order]]
* [[Payee]]
* [[Payor]]


[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 20:36, 27 June 2022

The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares.


Example

The current market price of ordinary shares is £2.

The conversion price is £2.50.


The conversion premium is given by:

= (2.50 - 2.00) / 2.00

= 0.50 / 2.00

= 25%.


See also